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Fresh hope for Tanzanian businesses seeking financing

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  Published in Business and Finance on Wednesday, October 29th 2025 at 5:58 GMT by The Citizen
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Fresh Hope for Tanzanian Businesses Seeking Financing

In a bold move to reignite the country’s small‑ and medium‑enterprise (SME) sector, Tanzanian authorities have unveiled a new financing initiative designed to bridge the credit gap that has long hampered local businesses. Launched on 25 August 2024, the scheme, spearheaded by the Bank of Tanzania (BoT) in partnership with the Ministry of Investment, Enterprise, and Employment Development, offers an unprecedented combination of lower interest rates, longer repayment tenures, and partial loan guarantees for eligible SMEs.

The Core of the Initiative

At its heart, the program – dubbed the SME Credit Access Programme (SCAP) – provides banks with a guarantee of up to 50 % on loans issued to registered SMEs. This guarantee, backed by the government’s Guarantee Fund for Small Businesses (GFSB), reduces the risk for commercial banks and encourages them to lend more aggressively to the sector. The initiative also establishes a dedicated SME loan desk within the BoT, which will oversee application processing and ensure compliance with best‑practice lending standards.

Key features include:

Businesses that have previously struggled to secure credit—especially in sectors such as agro‑processing, textile manufacturing, and digital services—will now have a more viable pathway to scale operations, invest in technology, and create jobs.

A Multi‑Stakeholder Approach

The SCAP is part of a broader strategy known as “SME 2025”, which aims to lift the average SME loan‑to‑asset ratio from 20 % to 45 % by 2025. According to Minister of Investment, John Mwesigire, the initiative is a cornerstone of the government’s commitment to the United Nations’ Sustainable Development Goals, specifically Goal 8 (Decent Work and Economic Growth) and Goal 9 (Industry, Innovation, and Infrastructure).

“We recognize that the SME sector is the backbone of Tanzania’s economy. By reducing the financial barriers that entrepreneurs face, we are creating a fertile ground for innovation, employment, and inclusive growth,” said Mwesigire during the launch ceremony.

The Ministry’s SME Development Unit will act as the liaison between businesses and the BoT, providing advisory services and facilitating the registration process. In addition, the initiative will benefit from the SME Microfinance Association (SME‑MFA), which will serve as a watchdog to monitor lending practices and safeguard borrowers’ interests.

How the Scheme Works

1. Application – SMEs submit their loan request through the BoT’s online portal or at designated district banks. Documents required include a business plan, financial statements, and proof of registration.
2. Assessment – The BoT’s SME desk conducts a risk assessment, focusing on cash‑flow projections, collateral, and market viability.
3. Guarantee Disbursement – If approved, the GFSB issues the guarantee to the lending bank, who then disburses the loan. The guarantee remains in force for the duration of the loan term.
4. Monitoring – Both the bank and the GFSB monitor the loan’s performance. Repayments are processed through the national payment system, and overdue accounts trigger automated alerts to the SME’s business adviser.

Early Success Stories

While the program is still in its infancy, initial feedback is promising. Mwalimu Soko, owner of a 12‑person textile workshop in Arusha, secured a TZS 30 million loan under SCAP. The funds allowed him to purchase a new looper machine and upgrade his production line, resulting in a 25 % increase in output within six months.

In the agricultural sector, Kariuki Foods Ltd., a dairy cooperative based in Morogoro, used a SCAP loan to expand its processing facility. The upgrade enabled the company to add a pasteurization unit, meeting stricter health standards and opening up export opportunities to East African markets.

Challenges and Mitigation Measures

Despite the positive outlook, several challenges persist:

• Credit Literacy – Many SME owners lack understanding of formal credit structures. The BoT and the Ministry will roll out a nationwide Credit Literacy Campaign through radio, mobile messaging, and community workshops.
• Collateral Constraints – SMEs often possess limited tangible assets. The guarantee mechanism partially alleviates this, but the program will also encourage alternative collateral models such as intellectual property and future receivables.
• Disbursement Speed – To avoid bottlenecks, the initiative introduces an “one‑page approval” process, reducing approval time to 15 business days.

Looking Ahead

The SCAP is slated to be reviewed after 12 months, with the BoT planning a potential expansion to cover larger SMEs and to include a “Green Business Grant” component aimed at encouraging environmentally sustainable enterprises.

Stakeholders remain optimistic that the combination of guaranteed financing, expert advisory support, and streamlined processes will spur a new wave of entrepreneurial activity across Tanzania. The success of the SCAP could serve as a model for other developing economies facing similar credit access challenges.

For more details on the SME Credit Access Programme, visit the Bank of Tanzania’s official portal at https://www.bandtanzania.go.tz or the Ministry of Investment’s SME page at https://www.moi.go.tz/sme.